If you plan to invest in a profitable asset, purchasing commercial property could be the ideal choice. However, to make it a successful venture you’ll need to carefully evaluate several factors including defining your objective, market trends, property location, and financial considerations. Commercial property investment can provide steady income and long-term growth, but a strategic approach is essential to maximize your returns.
Here’s what you must consider to ensure a successful investment in commercial real estate:
Steps to Purchasing Commercial Property
- Be clear about your objective. Are you purchasing the property for your business or purely as an investment? Clarifying this will help your real estate broker find the best options.
- For business operations: Determine your space needs for future growth. Consider how much and in what way your business is influenced by location. For instance, retail stores benefit from customer proximity, while industrial companies may prefer more remote, cost-effective areas.
- For Return on Investment (ROI): If you want immediate income, focus on properties in high-demand areas with established, long-term tenants. For long-term wealth, look for properties in emerging markets or those needing upgrades that can significantly boost their value over time.
- Find the right location. Choosing the right location is important for making the commercial investment successful. Consider factors like the convenience and ease of access for your target customers. Think about amenities such as transportation, housing, and healthcare, amongst others that you or your employees may need, and work with your real estate broker to identify any potential legal barriers.
- Inspect the property. Perform a comprehensive inspection to ensure the building is structurally sound and critical systems like HVAC and plumbing are in good working order.
- Research zoning regulations. Your commercial real estate broker can help you understand the property’s zoning requirements and whether they align with your business needs. This will help ensure your business can operate legally on the chosen property. Zoning requirements include restrictions on the building size, utility placement codes, types of business’ allowed, environmental regulations as well as other aspects that you need to be aware of before buying the property.
- Establish your budget and secure financing. Set a clear budget that includes the down payment, operational expenses (like property tax and insurance), and other expenses. Also, explore all your financing options prior to making your purchase. Your real estate broker can connect you with lenders and help you negotiate favorable terms.
- Envision and assess future scalability. If you are looking at the long-term use of your newly acquired commercial space, explore all possibilities for future expansion or modifications. Look for a property that has room for making these expansions possible as well as the necessary permits you may require for the same.
- Make an offer and fund the escrow. Once you’ve found a property that meets your criteria, work with your commercial real estate agent to draft a purchase offer. Have your broker and legal advisor review all documents thoroughly before signing. Be prepared to pay earnest money, typically around 1% of the property’s price to secure the contract.
Set the Foundation for a Successful Commercial Property Investment
Purchasing commercial property is a rewarding investment when approached with careful planning and due diligence. By researching the market, setting clear goals, and working with trusted experts, you can turn this venture into a profitable one. At Aim High Realty, we specialize in guiding business owners through the complexities of commercial property investments. Whether you’re seeking office space, industrial warehouses, or retail locations, our team is here to help make your investment a resounding success.